Amec Foster Wheeler set for Middle East expansion despite low oil prices

The energy services group Amec Foster Wheeler expects to expand in the Middle East despite cost pressures from persistent low oil prices.

Roberto Penno, the company’s regional head, said Amec was looking at locating its third regional hub in the UAE to market nuclear energy services in anticipation of the region’s plans to expand in this area.

It already has nuclear business operations in the United States and Europe, where it works for clients such as Electricité de France.

The company’s main business in the region is in oil and gas, where contracts include project management of Abu Dhabi’s offshore expansion of the giant Upper Zakum field.

The company, which was formed by the US$3.2 billion merger last year of London-listed Amec and Foster Wheeler of Texas, has been under pressure along with most companies in the sector as oil prices have more than halved in the past year.

It has been cutting costs mainly by eliminating jobs, but the company says oil and gas business will hold up in the Arabian Gulf and there will be opportunities to expand in other areas.

“We have 700 people working in the UAE and in excess of 2,000 in the Middle East generally, and on top of this – which is essentially in oil and gas – we plan to build the other elements,” which include solar, nuclear, electricity generation in general and some mining operations, Mr Penno said. The company has also lined up a new joint venture in Saudi Arabia, he added.

“The diversification strategy is really the biggest part of our ‘revenue synergy’ strategy”, in which the company has extended contracts to business in its traditional oil and gas areas.

There is still a big gap between government targets for rapidly expanding electricity generation from nuclear and renewable energy sources and the projects that have actually been set.

Amec Foster Wheeler also says oil and gas spending will hold up in the Gulf even as it is cut sharply in other regions.

Mr Penno said the company would be announcing a major new oil development contract in October, underlying the willingness of national operators to keep investing for the long term even amid a spell of lower oil prices.

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Anthony McAuley

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